How BYD killed Tesla! But can they stay on top?

Summary

BYD, once a budget phone battery producer, has risen to become the world's largest EV manufacturer, surpassing Tesla in 2023. Founded in 1995, BYD's strategic focus on battery technology and vertical integration has propelled its growth. With a strong domestic presence in China, the company is now expanding globally, particularly into Europe, where it faces geopolitical challenges and competition. The script explores BYD's journey, its competitive advantages, and the potential for other Chinese brands to disrupt the EV market.

Takeaways

• 🚀 BYD has become the world's largest EV manufacturer, surpassing Tesla in 2023 with a significant lead in battery-only car sales.
• 😄 Initially seen as a laughing stock, BYD has proven its critics wrong by evolving from a budget phone battery producer to a leading electric car manufacturer.
• 🔋 BYD's success is largely attributed to its expertise in battery technology, starting as a lithium-ion battery manufacturer for mobile phones and later applying this to EVs.
• 🏁 BYD's first foray into the automotive industry was with the acquisition of Xi'an Qinchuan Automobile in 2003, marking the beginning of BYD Auto.
• 🚗 The F3DM, launched in 2008, was the world's first mass-produced plug-in hybrid automobile, despite being a commercial flop at the time.
• 💰 A $232 million investment from Warren Buffett in 2008 played a crucial role in fueling BYD's ambitions in the electric vehicle space.
• 🔥 In 2020, BYD introduced the Blade Battery, an LFP battery that was more cost-effective, compact, and considered safer than other lithium-ion batteries.
• 📈 BYD's EV sales saw a significant surge from 131,000 in 2020 to 1.57 million in 2021, largely due to the adoption of the Blade Battery in models like the Han.
• 🌏 BYD is expanding globally, with a focus on European markets, and has been named the official EV sponsor of the Euro 2024 football championships.
• 🛡 The Chinese government's push for EVs, including substantial tax breaks, has been instrumental in BYD's domestic dominance with a 35% market share in China.
• 🏭 BYD's vertical integration strategy, producing a large portion of car components in-house, has been a key competitive advantage, allowing for cost savings and flexibility.

Q & A

Who is currently the world's largest EV manufacturer?

BYD is currently the world's largest EV manufacturer, having surpassed Tesla at the end of 2023.

What was the initial business focus of BYD when it was founded in 1995?

BYD initially focused on manufacturing lithium-ion batteries for mobile phones, supplying to giants like Motorola and Nokia.

What significant investment did BYD receive in 2008 that fueled its EV ambitions?

In 2008, BYD received a $232 million investment from Warren Buffett, which significantly fueled its electric vehicle ambitions.

What is the name of BYD's battery technology that was launched in 2020 and what are its advantages?

BYD launched the Blade Battery in 2020, which is an LFP (Lithium Iron Phosphate) battery. It is more compact, cost-effective, and considered safer compared to other types of Lithium Ion batteries used in EVs.

How has BYD's strategy of focusing on fleets and buses contributed to its success?

Focusing on fleets and buses allowed BYD to produce batteries in mass quantities, which was key to their success and provided a significant advantage over competitors.

What is the term used to describe BYD's approach to producing large parts of their cars themselves?

BYD's approach is called 'vertical integration,' which allows them to have a faster response to market trends and better support for brand development and customer services.

What is the significance of BYD being named the official EV sponsor of the Euro 2024 football championships?

Being named the official EV sponsor of the Euro 2024 football championships indicates BYD's growing presence and brand recognition in the global market, especially in Europe.

What challenges does BYD face as it expands into the European market?

BYD faces challenges such as the EU Commission's investigation into Chinese EV imports, which could lead to increased tariffs, and the need to establish its own battery supply chain within the EU.

How does the geopolitical climate affect BYD's expansion plans, particularly in the U.S. market?

The geopolitical conflict between China and the U.S. has led BYD to take a less aggressive approach to entering the U.S. market, with a 27.5% tariff on automotive imports from China posing a significant barrier.

What is the potential impact of Tesla's rumored low-cost EV on the market and BYD's position?

Tesla's rumored low-cost EV could provide competition to the affordable EVs that have flooded the market from China, potentially challenging BYD's current market position.

What factors do established car manufacturers need to focus on to compete with BYD and Tesla?

Established car manufacturers need to focus on innovation and price to compete with BYD and Tesla. They must offer products that are at least as innovative and not more expensive than those of their competitors.

Outlines

00:00

🚗 BYD's Rise to the Top in the EV Market

BYD, once ridiculed for attempting to compete in the electric vehicle (EV) market, has now become the world's leading EV manufacturer, surpassing Tesla at the end of 2023. The company's journey from a small startup to a global giant is remarkable, having started as a lithium-ion battery producer for mobile phones and later venturing into the automotive industry. BYD's success is attributed to its innovative Blade Battery, which is more cost-effective and safer than other lithium-ion batteries. The company's sales have primarily been within China, where it enjoys a significant market share, but it is now expanding globally, especially into Europe, where it is launching new models and has become the official EV sponsor of the Euro 2024 football championships.

05:07

🌏 China's Dominance in the EV Sector and BYD's Global Expansion

BYD's growth and dominance in the EV market are closely tied to the Chinese government's support for the EV industry, which includes substantial tax breaks. This has allowed BYD to achieve a 35% market share in China, compared to Tesla's 7.8%. BYD's strategy of targeting fleets and buses has enabled it to produce batteries in mass quantities, which has been a key factor in its success. The company's vertical integration allows it to produce a large portion of its cars in-house, avoiding additional costs and logistical issues faced by competitors like Tesla. As BYD looks to expand globally, it faces challenges such as the EU Commission's investigation into Chinese EV imports and potential increased tariffs, but it is also considering building a factory in Hungary to circumvent these issues.

10:11

🏭 BYD's Strategic Moves in the Face of Geopolitical Challenges

BYD's ambition to maintain its position as the top EV manufacturer involves strategic expansion, such as building a new electric car factory in Hungary, making it the first Chinese company to manufacture cars in Europe. This move is a response to the EU's efforts to establish its own battery supply chain and to encourage manufacturers to open plants within the EU. The U.S. market presents a different set of challenges due to geopolitical tensions and existing tariffs on Chinese automotive imports. While BYD has supplied electric buses to the U.S., it has not yet entered the car market there. Meanwhile, Tesla is rumored to be working on a low-cost EV model, which could compete with BYD's affordable EV offerings.

15:16

🤔 The Future Landscape of the EV Market

The competition between BYD and Tesla is not just about the two companies but also about the broader automotive industry's response to these new market leaders. Established brands like Volkswagen are also strong contenders, but there is a gap between them and the current frontrunners. The key for traditional manufacturers to compete effectively is innovation and price competitiveness. The rise of Chinese brands like BYD and the potential of others, such as Geely, signals a shift in the global automotive landscape. As the EV market continues to grow, consumers stand to benefit from increased competition, innovation, and more affordable options.

Keywords

💡EV manufacturer

An EV manufacturer refers to a company that produces electric vehicles. In the context of the video, BYD is highlighted as the world's largest EV manufacturer, surpassing Tesla in 2023. This term is central to the video's theme, which discusses BYD's journey and dominance in the electric vehicle industry.

💡BYD

BYD, which stands for 'Build Your Dreams,' is a Chinese company that started as a battery producer and evolved into a leading electric car manufacturer. The video script discusses how BYD became the number one EV manufacturer globally by the end of 2023, showcasing its transformation from a small startup to an industry giant.

💡Tesla

Tesla is an American electric vehicle and clean energy company that was once the world leader in EV production. The script mentions Tesla as the previous top EV manufacturer, which BYD overtook in 2023, emphasizing the competitive landscape of the electric vehicle market.

💡Blade Battery

The Blade Battery is a Lithium Iron Phosphate (LFP) battery developed by BYD. It is noted for being more cost-effective and compact compared to other lithium-ion batteries used in EVs. The script highlights the Blade Battery as a key innovation that contributed to BYD's success in the EV market.

💡Vertical integration

Vertical integration in the context of the video refers to BYD's strategy of producing large parts of their vehicles in-house. This approach allows the company to control costs, reduce delays, and improve logistics, giving them a competitive advantage in the EV industry.

💡Market share

Market share represents the portion of the total market a company controls. The script indicates that BYD has a significant market share in China, with 35% compared to Tesla's 7.8%, illustrating the company's dominance in its home market.

💡Geopolitical conflict

Geopolitical conflict refers to tensions between countries that can affect trade and business decisions. The video mentions the conflict between China and the U.S. as a factor that influences BYD's cautious approach to entering the American EV market.

💡State subsidies

State subsidies are financial assistance provided by the government to support certain industries or companies. The script discusses how Chinese government subsidies have helped BYD and other Chinese EV manufacturers to grow and compete on price in the global market.

💡European expansion

European expansion refers to BYD's strategy to enter and grow its presence in the European market. The video script mentions BYD's plans to build a factory in Hungary and its efforts to become the official EV sponsor of the Euro 2024 football championships as part of this expansion.

💡Battery supply chain

A battery supply chain involves the network of processes and industries involved in the production and distribution of batteries. The video discusses the EU's efforts to establish its own battery supply chain to reduce reliance on imports and ensure the availability of critical raw materials.

💡Innovation

Innovation in the context of the video refers to the development of new technologies or methods that give a company a competitive edge. The script suggests that innovation, along with competitive pricing, is crucial for traditional car manufacturers to compete with BYD and Tesla in the EV market.

Highlights

BYD became the world's largest EV manufacturer by the end of 2023, surpassing Tesla.

In 2011, BYD was considered a laughing stock in the EV industry.

Elon Musk acknowledged BYD's competitiveness in the EV market.

BYD started as a budget phone battery producer and evolved into a top EV manufacturer.

BYD outsold Tesla in battery-only cars in the final quarter of 2023.

Most of BYD's sales have been within China, their largest market.

BYD was the first to mass-produce a plug-in hybrid automobile with the F3DM in 2008.

A $232 million investment from Warren Buffett in 2008 boosted BYD's EV development.

BYD launched the Blade Battery in 2020, an LFP battery with cost and safety advantages.

BYD's EV sales increased dramatically from 131,000 in 2020 to 1.57 million in 2021.

BYD's vertical integration allows for cost efficiency and quick market response.

BYD is expanding globally, with a focus on the European market.

BYD's success is attributed to Chinese government support and tax breaks for the EV industry.

BYD produces a significant portion of their car parts themselves, enhancing their competitive advantage.

BYD is securing lithium deposits to strengthen their vertical integration in battery production.

BYD faces challenges in Europe due to potential increased tariffs and investigations on Chinese EV imports.

BYD plans to build an electric car factory in Hungary as a response to the EU's push for local manufacturing.

The U.S. market poses difficulties for BYD due to geopolitical tensions and high import tariffs.

Tesla is rumored to be working on a low-cost EV model to compete with affordable Chinese EVs.

The EV market is experiencing a price war as traditional brands respond to new market entrants.

German brands like VW need to innovate and offer competitive pricing to compete with BYD and Tesla.

Geely is seen as a potential future competitor in the global EV market with its broad product portfolio and innovation.

Transcripts

BYD – The world’s largest EV manufacturer!

How did they get there?

And can they stay on top?! 

In 2011, the current world leader was still a laughing stock... 

“Why do you laugh? 

Hahaha…. 

BYD is trying to compete?

Why do you laugh? 

Have you seen their car?… 

Well this aged like milk.

At the end of 2023, BYD stormed past Tesla to become the number one EV manufacturer on

the planet!

So is BYD having the last laugh? 

Though, to be fair, Elon Musk has since said that BYD is very competitive. 

Like rapper Drake, BYD started at the bottom before reaching the top!

But how did this budget phone battery producer become the best-selling electric car manufacturer?

And how long can they remain number 1? 

"We will see a big race between BYD and Tesla in the next three to four years!" 

In the final quarter of 2023, BYD outsold Tesla in battery-only cars – 526,000 to

484,000 – for the first time. 

"I think what it really shows is the kind of the change that is happening in the car

industry at the moment.

Most of BYD sales have been within China.

It's their biggest market, about 90% of their sales and a lot of their stuff there is done

on selling in big volumes and at quite competitive prices.." 

This was not a complete surprise, as it was the second year in a row they'd beaten Tesla

in terms of production.

But the first time around, the figures included BYD’s EVs plus their hybrids.

So, at the IAA in Munich in 2023, BYD was more than happy to flex. 

‘In last year, with 1.86M new energy vehicle car sales, which is 3 times of the previous

year.

BYD become the world number 1 new energy vehicle brand.’ 

Now it’s beating Tesla with EVs ONLY! 

BYD or Build Your Dreams, once a small startup with just 20 employees back in 1995, has evolved

into an electric car giant.

Founded by chemist Wang Chuanfu in China, it initially manufactured lithium-ion batteries

for mobile phones just as the smartphone trend took off.

Business boomed supplying giants like Motorola and Nokia. 

Chuanfu had already been interested in battery technology as a student. 

In 2003, BYD ventured into cars by acquiring Xi’an Qinchuan Automobile.

This was the start of BYD Auto.

The F3 -- its first combustion-engined car, which looked similar to the Toyota Corolla

-- debuted in 2005.

But it was much cheaper than a Corolla. 

By 2008, BYD entered the electric vehicle space with the F3DM.

It was the world's first mass-produced plug-in hybrid automobile.

A flop at the time. 

Still: A $232 million investment from Warren Buffett in 2008 fueled BYD's EV ambitions. 

In 2020, BYD launched the Blade Battery, an LFP – or Lithium Iron Phosphate – battery,

which cost less than other types of Lithium Ion batteries used in EVs. 

BYD's Blade was more compact and seen as safer as well.

A clever move. 

The Han, BYD's sporty sedan, and subsequent models incorporated the Blade Battery.

BYD's EV sales surged from almost 131,000 in 2020 to 1.57 million in the following year. 

"The battery is the most expensive part of the car.

It's about 40% of the cost of an electric car is the battery.

And if you have competencies in a battery, also innovation-wise but also cost-wise, then

you have a big advantage in building electric cars." 

China EV Domination  Like NIO before them, BYD is eyeing global

markets -- especially Europe, where they're launching three of their models. 

So it's no coincidence that BYD was named the official EV sponsor of the Euro 2024 football

championships.

That could be another nail in the coffin for the German auto industry, as this was long

Volkswagen's golden ticket.

Now BYD is on everyone's lips. 

"Come on, begin your wonderful trip with BYD ATTO 3! 

What kind of car is this? 

Does it run on gasoline? 

No, this car is very environmentally friendly.

Yes, it's fully electric. 

I can't hear any sound at all.

BYD can no longer say they're the biggest car brand you’ve never heard of!

Already a giant in Asia, they're expanding around the globe. 

"Keep exploring the world together! 

Move towards and strive for the halo!" 

‘Since launching the passenger car brand in Europe last October, BYD entered 15 European

countries within just 11 months’   

The rise of Chinese EVs and BYD owes much to a push by the Chinese government.

The EV industry has enjoyed huge tax breaks.

That's led to BYD's domination domestically, with a market share of 35% in China, compared

to Tesla’s 7.8%. 

"The biggest difference, if you look at them, is where they compete.

Tesla still kind of has a kind of fairly style and design and there's real desire around

that Tesla badge and brand now.

Whereas BYD much more competes on price, but it's kind of offering more for the same price

as other car firms." 

BYD has been able to undercut Tesla, pricing their cars a lot cheaper, thanks to the subsidies.

But there's another secret to their success.

Unlike Tesla, BYD went for the lower hanging fruit: fleets & buses, enabling them to produce

batteries in mass quantities. 

That battery development has been key to their success, giving them a huge advantage over

their U.S. and European rivals.

Unlike many of their competitors, BYD produces large parts of their cars themselves -- helping

them avoid extra costs, delays and logistical problems that have hurt companies like Tesla. 

"That is one of the competitive advantages of BYD that they have a high added value of

about 75% of added value in the car that they make themselves.

And this brings them to this position they are now." 

BYD calls this vertical integration. 

‘Our vertical integration capability gives us the flexibility to have a faster response

to the market trend, as well as better support for brand development and customer services’.

BYD is actively securing lithium deposits, to strengthen their vertical integration.

Their successful formula looks set to continue. 

The Battle For Number One  For BYD to stay at number one they need to

expand, and this road may not be as smooth as the domestic one has been.

But growing demand in Southeast Asia & Australia certainly helps, and BYD already has a significant

market share in Thailand. 

But Europe poses tougher problems.

The aggressive expansion of the Chinese auto industry into Europe has ruffled some feathers.

The EU Commission is investigating Chinese EV imports, which could lead to increased

tariffs.

This move is driven by concerns about unfair competition, because of those state subsidies

we mentioned earlier. 

But this is a double-edged sword that could do more harm to European car brands. 

"We see that German manufacturers are not really happy that there's a discussion of

imposing taxes to Chinese manufacturers.

Because they know if the Chinese get problems in Europe and there were regulatory hurdles

for the Chinese players coming to Europe, the same will happen then in China too." 

"BYD says it will build a new electric car factory in Hungary.

This coming the first Chinese company to make cars in Europe!" 

  The investigation aims to push manufacturers,

including BYD, to open plants in the EU.

As a response, BYD is looking to build a factory in Hungary. 

The EU is also working on establishing its own battery supply chain, tackling challenges

such as obtaining critical raw materials domestically. 

  And the U.S.? It's an even tougher market

to crack.

Tensions between China and the U.S have meant that BYD is taking a less aggressive approach

to entering this territory. 

  "The geopolitical conflict between China and

the US is a big hurdle.

And I think what could happen is that BYD, after being successful in Europe, is thinking

about building up plants in the US.

Without building up plans and have a supplier base in the US, it will be very hard for the

Chinese companies, especially BYD, to be successful." 

Though they've supplied electric buses to the U.S. for years, BYD have not entered the

car market there.

And it looks like it will stay that way for now as the U.S. currently imposes a 27.5%

tariff on automotive imports from China. 

Tesla’s long-rumored, low-cost EV has yet to materialize.

But it could provide an answer to the cheap EVs that have flooded the market from China. 

"It's really important for Tesla to offer also a car in a lower segment.

A segment of the small-sized cars beginning, for instance, at 25,000 euro.

And I'm pretty sure Tesla is working very hard on such a model.

There are rumors that next year this Model 2 maybe that's the name will be produced and

offered." 

A New King In Town? 

While BYD currently wears the crown taken from Tesla, this is a marathon and not a sprint. 

"These two that will be ahead of the pack so to say.

Volkswagen as a car group is also strong but there's a gap between these two and I would

say that the BYD would lead the electric car ranking for the next few years." 

"So I think perhaps the most interesting thing is less about the battle between Tesla and

BYD and more about what the big established manufacturers that have a hundred years of

history in making cars are going to do to catch these upstarts." 

So while these two EV giants duke it out, German brands like VW seemingly sit and watch

from the sidelines hoping for scraps. 

What is clear, if German brands want to compete with BYD and Tesla, the key factors are innovation

and price. 

"German manufacturer especially to be at least as innovative as Tesla and the Chinese players.

And if they are not more innovative than Tesla and the Chinese it's clear they can't be more

expensive!" 

But could we see another Chinese brand come out of nowhere and replicate BYD’s success?

Like automotive giant Geely? 

"Geely is for me a very interesting global player of the future: because they have a

quite broad product portfolio and we also see that they are quite Innovative in the

electromobility sphere.

So I would also bet on the Geely group as an important competitor of the future.” 

We're witnessing the emergence of an EV price war across global markets as legacy brands

respond and these new players look to dominate.

This is a win for consumers, one that looks set to prolong the boom in EV sales. 

But the geopolitical climate means this road is not a smooth one, so unless other car manufacturers

innovate soon, BYD will be hard to dethrone. 

What do you think?

Leave us a comment and don’t forget to subscribe to our channel!